Report: Distributed Generation and Cogeneration Roadmap

This March 2007 report, Full Report: Report: Distributed Generation and Cogeneration Policy Roadmap for California, from the California Energy Commission provides a nice state-based, how-to perspective on policy options to increase the use of small scale DG along with larger combined heat and power projects. California's roadmap is designed to increase the penetration rate of CHP and DG from 17 percent of 2004 peak capacity (56,435 MW) to over 25 percent by 2020 (expected peak demand of 70,776 MW).

To reach the goals oulined in the table above, the report recommends a three-pronged approach:

• Support Incentives in the Near-Term.
• Transition to New Market Mechanisms.
• Reduce Remaining Institutional Barriers.

The near term incentives will support DG and CHP but the incentives are envisioned as disappearing as regulatory changes are implemented that result in a level playing field for cleaner and more efficient technologies compared to traditional power generation.

The CEC proposes and interesting array of new and more common market mechanisms to enhance DG projects. These include, promoting development of renewable and CHP/DG through portfolio standards, transformation of rate structures to internalize location, temporal and environmental benefits, and development of emissions markets that include and appropriately value DG and cogeneration.

California has made tremendous strides in the past several years in removing barriers to DG and cogeneration. The last strategic thrust would address remaining barriers:

• Institute an analytical framework for DG and cogeneration for assessing costs and benefits.
• Enable DG and cogeneration to be effectively integrated into the electric power system by addressing rate design.
• Promote DG through rules and standards development.
• Institute a permitting process that is environmentally responsible.

More

• Full Report: Distributed Generation and Cogeneration Policy Roadmap for California- California Energy Commission, March 2007
• New Rules Project's section on Barriers to DistributedGeneration